Dave Hughes isn’t an economist, but he doesn’t need to be to see what’s going on. The comedian says the government treats our money like they found it in a sack by the river. The OECD and Deloitte, minus the jokes, are saying exactly the same thing.
The latest economic report card on Australia has been released by the OECD, and it says that many of our countrymen and women would be reading the Paris-based thinktank’s findings and doing a Dave Hughes, saying: Not happy, Albo and Jim. Not happy!
Bluntly, as the AFR’s Michael Read tells us: “Australians have experienced one of the sharpest declines in living standards in the developed world since the pandemic.”
And it gets worse, as he adds that “the OECD warns real wages are set to fall even further this year as high inflation erodes workers’ incomes.”
This is not great reading, given yesterday Deloitte Access Economics told us that we were “facing its longest stretch of weak economic growth since the early 1990s recession”.
Neither of these revelations strengthens Treasurer Jim Chalmers’ claim to be a strong economic manager.
Let’s look at the guts of these views from these two objective economic bodies:
- Inflation since March 2021 has cut real wages, that is what they buy, by 5.1%.
- The average OECD country saw a 5% lift in real wages or living standards.
- Only 11 out of the 38 member countries of the OECD saw the real minimum wage fall over 2025-26 and Australia was one of them.
- Both Australia and New Zealand living standards are “still close to their post-pandemic lows, the OECD found”.
- And the OECD thinks this story worsens because of the Iran war’s impact on inflation via petrol prices and other related cost increases.
Responding to this bad economic report card, this is what the Treasurer told us: “Under Labor, Australia has the lowest average unemployment of any government in half a century, smaller deficits and less debt than the Coalition left us, booming business investment, with tax cuts and higher wages that the right-wing parties oppose.”
To be fair, Jim is right on Labor’s unemployment record but there has been a price of higher inflation, high interest rates and as the OECD says the wages might be higher in dollar terms but they buy less.
The smaller budget deficits are only compared to big deficits created by the pandemic lockdowns.
Budget deficits and surpluses
This chart from Trading Economics actually shows deficits are getting bigger, with the really big ones created during the Covid era, when all governments had to spend to save us falling into another Great Depression.
Jim and Albo get an A for the unemployment result but get Fs for the subjects of Inflation, Interest Rates and Real Wages, which explains the poor living standards report from the OECD.
Like all students who are underperforming, they need guidance on how to improve and Deloitte Access Economics economist Stephen Smith explained what’s needed.
“For too long, strong population growth has masked a weak underlying productivity performance and lifted aggregate growth while doing less to improve living standards,” Smith told the AFR.
Right now, many economists agree with Smith, who’s tipping a period of the slowest economic growth since the 1990s recession period.
Ultimately, Chalmers might have the last laugh over economists, but he will have to see inflation and interest rates fall without unemployment rising significantly, but that’s easier said than done.
But there is another view.
As comedian-turned-economics commentator, Dave Hughes, said on Nine’s Today show to Karl Stefanovic and Sarah Abo after the surprise Budget tax changes: “The people who are in charge of our country are idiots, and they treat our money like they found it in a sack by the river and they have to spend it before someone finds out”.
That is a colourful way to describe an economy, which he thinks is “going through the floor” because of the Government’s policies.
Jim and Albo have less than two years until the next election to prove Dave and other critics and economists right or wrong. As an Australian business owner and financial advisor, I want a strong economy and solid stock market, so I hope Dave’s wrong, but I wouldn’t put money on it.
unemployment is easy just employ more on the government payrol but are they producing any thing or are they making it harder for the people in real jobs to get ahead thru all the regulation ,red tape and anti private business policies which the government employs these public servants to do
Yes. They’ve just been hiring public servants to beat the band. There’s little or zero employment being created in the private sector. Too much red tape created by too many public servants trying to create jobs for themselves. It’s a vicious circle. Regrettably these guys won’t fix anything, they’re socialists. Their answer to everything is borrow and spend. Time to batten down the hatches. I think there’s a severe recession coming & I also think the Australian dollar will get a pounding because debt markets won’t want to hold paper in such an underperforming economy. We’re headed for a massively failing economy under these guys.
Precisely.
It is not the Government’s remit to ensure that all workers receive pay increases above the inflation rate. People fall behind.
Slowly but surely we are creating a society with their hands out expecting all to be provided by Government. In return for votes, the Government creates even more hand out schemes that are unfundable and, worse still, thrown open to uncontrolled abuse. The vicious cycle is self perpetuating and, as the tax from income runs out, the Government, like a heat seeking missile, targets the capital of those who actually contributed, provided for their own retirement and never put their hands out for a government hand out. No wonder industrious, prudent citizens throw up their hands in despair. It’s a national disgrace!
Also with the huge immigration figures increasing the population the unemployment figure as a percentage of the population is reduced. It is, as usual, smoke and mirrors and they think we are too stupid to see it.
It’s rich hearing Dave Hughes lecture Australians about the cost of living when he’s a multimillionaire with a substantial property portfolio. Rising house prices have been very good to him, so perhaps he’s not the best spokesperson for those struggling with rents and mortgages.
And Peter Switzer isn’t exactly an impartial observer either. He’s built a successful financial media empire and makes a living commenting on markets and government policy. That’s his right, but presenting selective statistics while ignoring the global context isn’t objective analysis.
Australia didn’t experience inflation in a vacuum. Every advanced economy was hit by the post-pandemic supply shock, the energy crisis following Russia’s invasion of Ukraine, and more recently renewed tensions and conflict involving Iran, which pushed up oil prices and fuel costs. Those global pressures fed directly into inflation and living costs here. Pretending Australia’s economic challenges were created solely by Jim Chalmers or Anthony Albanese is political spin, not serious economics.
Well Pete, nothing surprising by the comments from your report. I’ve been saying it all now ever since they got into power “just watch this clown show”.
Just name me one good thing Albanese has done for our country ever since he got into office? And as for dumbo Jimbo, just forget about his stupid Phd on Paul Keating – what a fool of a degree. I would luv to see his academic achievement in his commerce degree. He also did a BA. That’s about his level of aptitude if one could call it that.
Your paper and the subsequent comments are spot on, and I certainly would not bet on, that they can turn it around.
Cheers.
…and with the Coalition’s transformation into ‘Labour Lite’ over the past decade, what hope do Aussies have? Pauline! here we come..